The Chinese real estate giant is in trouble — and elite donations can't hide it
Last week, financial ratings agency Fitch quietly withdrew ratings from Chinese real estate behemoth Evergrande. The news, which travelled little further than a single Reuters headline, barely caught any attention outside of China.
Late last year, Evergrande defaulted on its $300 billion debt. It now seems to have ceased providing financial data to the public entirely. But along the way to this troubling end point, it did something very peculiar.
In February 2020, then just a month away from announcing a plan to reduce its debt by $23.3 billion per year over the subsequent three years, Evergrande pledged to give Harvard University $115 million for Covid research.
On the 2nd February, Harvard reached out to Anthony Fauci days before the deal was made, saying Evergrande’s CEO wanted to connect Fauci with Zhong Nanshan, the legendary Chinese pulmonologist credited with stopping the SARS1 outbreak, and implied that Evergrande was looking to help coordinate pandemic response efforts.
Setting aside the question of where a company months away from defaulting would get such a sum, the real question is why it would give it. The answer may lie in an attempt to shore up the message that China was fully in control of the Covid-19 pandemic burgeoning around the world.
The Evergrande-Harvard deal was announced to much fanfare, with jubilant praise for China’s excellent handling of the pandemic coming from the who’s who of the elite global virology and public community communities. Jeremy Farrar, head of the UK’s Wellcome Trust, who has no official ties to Harvard or China, was called upon to laud the Harvard-Evergrande deal in an article for Science magazine:
The last phrase, “as the China Evergrande Group did,” was intriguingly appended by the Science reporter. But the kicker in the Science piece came with a quote from yet another eminent scientist who similarly had no connection to the deal. “Coronavirus is not good for real estate,” Yale epidemiologist Sten Vermund was quoted as saying.
By the time of the Harvard deal, Evergrande was so indebted that it had fallen afoul of all three of the Three Red Lines policy constraining corporate debt the CCP was then starting to implement. Considered a potential risk to the entire Chinese economy, Evergrande could not possibly have made a $115 million donation to an American university (and one, it ought to be noted, with a $52 billion endowment) without prior government approval.
In addition, it’s even less likely that the company could have volunteered China’s most famous scientist to speak with American officials and academics without the CCP’s direct involvement. A more realistic scenario is that beyond merely sanctioning the deal, the Chinese government engineered it.
The CCP no doubt understands that China’s economic fortunes are tied to its real estate industry. Evergrande’s slow-motion implosion might put a hole in the hull of China’s great economic ship, but widespread perception that China had lost control of the virus would have driven its finance-build-and-spend bonanza onto the reef.
China has now backed itself into a “Zero Covid” corner. Complicit Western messaging about the “private [Chinese] sector stepping up” simply cannot compete with imagery of Chinese citizens being dragged out their homes and beaten in the street by “Big Whites” while pets are mercilessly culled.
Coronavirus is indeed not good for real estate — though it doesn’t take a distinguished Yale epidemiologist to say so. China is discovering, all too late, that rather like real estate, trying to control a global pandemic cannot be faked.
Ashley Rindsberg is an investigative journalist and author of The Gray Lady Winked: How the New York Times’ Misreporting, Distortions and Fabrications Radically Alter History.